CGT event G1 in section 104-135 of the ITAA 1997 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. ITAA 1997 104-135(3) ITAA 1997 115-25(1) CGT events G1-G3 - shares 18. 69. 24. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. No part of the return of capital paid to you by Wesfarmers on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). ITAA 1936 45B(5)(b) Copyright Act 1968 82. This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. 43. If you made a capital gain on this CGT event, you must include it in your calculations when completing item 17 on your 2003-04 tax return (supplementary section). The following description of the scheme is based on information provided by the applicant. 18. 28. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). Make sure you have the information for the right year before making decisions based on that information. A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). The uplift factor is worked out by dividing 123.4 by the consumer price index for the December quarter of 1986 (79.8) and is 1.546 (rounded to three decimal places). Mark has not made a capital gain on his shares as a result of the capital return so he does not have to put anything on his 2003-04 tax return to reflect this event. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Maria purchased 1,000 Wesfarmers shares in December 1986. ITAA 1997 116-20(1) As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Return of capital is not a dividend for income tax purposes. 30. ITAA 1936 45C(2) If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. ITAA 1936 45B(2)(c) 31. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). 24. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 3. ITAA 1997 975-300(3) Wesfarmers has advised that, at the time CGT event G1 happens for any foreign resident Wesfarmers shareholder who is entitled to the return of capital, a Wesfarmers share will not be an indirect Australian real property interest (as defined in section 855-25 of the ITAA 1997). A Wesfarmers shareholder will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. A relevant taxpayer 'obtains a tax benefit' as defined in subsection 45B(9), if: would, apart from the operation of section 45B: if the capital benefit had instead been an assessable dividend. This Ruling sets out the income tax consequences for shareholders of Wesfarmers Limited (Wesfarmers) who received the return of capital payment of $2.00 per ordinary share on 2 December 2021 (Payment Date). A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. For those shareholders who are not tax residents of Australia and hold their shares on capital account, no Australian income tax implications should arise as a consequence of the return of capital. The only relevant category of taxable Australian property is table item 2 of section 855-15. It states that a person is provided with a capital benefit if: 52. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. according to an ATO ruling. ITAA 1997 104-135 If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. 10. The effect of such a determination is that all or part of the return of capital received by Wesfarmers shareholders is treated as an unfranked dividend paid by Wesfarmers out of profits. Accordingly, CGT event G1 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). These included the divestment of Wesfarmers interest in the Bengalla coal mining joint venture, Curragh coal mine, Kmart Tyre & Auto, Quadrant Energy and 10.1 per cent of Wesfarmers post-demerger 15 per cent shareholding in Coles. 9. If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. Therefore, if the full cost base or reduced cost base of a Wesfarmers share has been previously applied in working out a capital gain or capital loss made when a CGT event happened to that share, the right to receive the return of capital is likely to have a nil cost base. However, the circumstances of the return of capital indicate that there was no streaming of capital benefits to some Wesfarmers' shareholders and dividends to other Wesfarmers' shareholders. 59. 58. The following description of the scheme is based on information provided by the applicant. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. The purpose which causes section 45B to apply may be the purpose of any party to the scheme. A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). ITAA 1936 47 ITAA 1997 855-15 60. 26. 20. ITAA 1997 104-165(3) Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. The Payment Date is anticipated to be late November to early December 2013. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . Having regard to Wesfarmers strong balance sheet and cash flow generation, together with its wellestablished funding sources and robust credit metrics, the Board was of the opinion that, consistent with Wesfarmers growth strategy, Wesfarmers was able to undertake the return of capital without materially prejudicing its ability to fund new investments, or to take advantage of value accretive opportunities, if they arise. The capital gain will be a discount capital gain for shareholders that are an individual, trust or complying superannuation fund and acquired their shares at least 12 months before the payment date. Using this method, Maria has made no capital gain on the return of capital, so she does not have to put anything on her 2003-04 tax return to reflect this event. How do I provide, update or check my bank account details? Note: Therefore, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. 42. Wesfarmers credited $12,733 million to its share capital account on the issue of Wesfarmers ordinary shares and partially protected ordinary shares to Coles Group shareholders in part payment for the acquisition of all the issued shares in Coles Group. Foreign-resident shareholders able to disregard capital gains tax. In broad terms, section 45B of the ITAA 1936 applies where: 49. Shareholders are sent return of capital payment advice. ITAA 1997 Div 112 CGT event G1 happened when Wesfarmers made the return of capital to you in respect of Wesfarmers shares you owned at the Record Date and continued to own at the Payment Date (section 104-135). The Commissioner will not make a determination under either The right to receive the payment (being an intangible CGT asset) will end by the right being discharged or satisfied when the payment is made. You can treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Wesfarmers shares at least 12 months before the Payment Date (subsection 115-25(1)), provided the other conditions in Subdivision 115-A are satisfied. For those employee shareholders who hold their shares within a New Zealand Wesfarmers employee share plan, are tax residents of New Zealand and only work in New Zealand, it is expected the return of capital payment will be treated as dividend income. ITAA 1936 44 ITAA 1997 104-135(4) Section 45A - streaming of dividends and capital benefits. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. 25. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. . TD 2000/10, Subject References: TAA 1953 The table sets out these five categories of CGT assets: 77. For participants in all other Australian employee share plans, the tax implications are as follows: For shares that had not reached their ESS deferred taxing point at the time of the return of capital payment (i.e. How did the capital return work and what was the effect on the company? In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. Under with section 112-25 of the ITAA 1997, the consolidation of Wesfarmers shares will not result in a CGT event happening where the company converts its shares in accordance with section 254H of the Corporations Act. 74. 19. Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. 8 December 2021. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders. 48. ITAA 1936 45B(3) Accordingly, section 45A has no application to the return of capital. 4. ITAA 1997 104-25(3) 55. The assets disposed of were Wesfarmers' interests in Wesfarmers Bengalla Pty Ltd, Wesfarmers Curragh Pty Ltd, Tyre & Auto Pty Ltd and Quadrant Energy Holdings Pty Ltd, as well as 10.1% of Wesfarmers' 15% shareholding in Coles Group Limited. ato class ruling wesfarmers return of capital. ITAA 1997 104-135(4) Wesfarmers operates a diverse business which covers home improvement, office supplies, department stores and an industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 3. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 58. Eligible shareholders received 1 COL share for each WES share owned. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. Aussie supermarkets set to capitalise on high inflation, but softer demand ahead, WESFARMERS LIMITED : Ex-dividend day for interim dividend, Out of lockdown, Kmart pushes Australia's Wesfarmers to higher profit, Transcript : Wesfarmers Limited, H1 2023 Earnings Call, Feb 15, 2023, Wesfarmers Raises Dividend as Fiscal H1 Profit, Revenue Increase, Australian Stock Exchange - 12:10:24 2023-03-01 am EST. 54. 42. If the return of capital of $2.00 per Wesfarmers share you received was not more than the cost base of the share, the Cost base / reduced cost base of each share is reduced by the amount of the return of capital (subsection 104-135(4)). Section 45A applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the receipt of capital and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. The distribution was entirely capital in nature. In working out the capital gain or capital loss when CGT event C2 happens, the capital proceeds are equal to the amount of the return of capital ($2.00 per Wesfarmers share) (subsection 116-20(1)). ITAA 1936 45A(2) The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. Mark purchased 200 Wesfarmers shares in December 2000. At 30 June 2007, Wesfarmers' share capital was $2,256 million, with retained earnings of $1,131 million (effectively $588 million after the final 2007 dividend of $543 million). You received $2.50 for each share that you held on the record date. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. ITAA 1997 Div 197 This payment was: 34. ITAA 1936 45B(8) ITAA 1997 855-15 Wesfarmers derived a net profit after tax of $1.335 billion from the disposal of the assets, which was paid to shareholders as special dividends in April 2019 and October 2020. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 63. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. . Collectively, shareholders received a total distribution of approximately $1,143 million. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). ATO references: As the share capital account of Wesfarmers is not tainted within the meaning of Division 197 of the ITAA 1997, paragraph (d) of the definition of 'dividend' in subsection 6(1) will apply and the return of capital will not constitute a dividend under subsection 6(1). Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. 38. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. If the amount of the return of capital of $2.00 per Wesfarmers share is not more than the cost base of your Wesfarmers share, the Cost base / reduced cost base of the share are reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4)). 17. ITAA 1997 104-165(3) A Wesfarmers shareholder will make a capital gain if the amount of the return of capital ($0.50 per fully paid share) is more than the cost base of the Wesfarmers share (subsection 104-135(3) of the ITAA 1997). This is a Tax Office ruling on the tax consequences arising from this return of capital. ITAA 1936 45B(5) Some of the information on this website applies to a specific financial year. Australian Taxation Office for the Commonwealth of Australia. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. The summary in these documents and in this section is general in nature and should not be relied upon as advice. In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. The capital return has been approved by the shareholders. Shares in Wesfarmers will be 'an indirect Australian real property interest' if (among other things) they pass the principal asset test in section 855-30. In working out the capital gain or capital loss made when CGT event C2 happens, the capital proceeds will be the amount of the return of capital ($0.50 per fully paid share) (subsection 116-20(1) of the ITAA 1997). (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. ATO Class Ruling - return of capital to shareholders. At 30 June 2007, Wesfarmers' share capital was $2,256 million, with retained earnings of $1,131 million (effectively $588 million after the final 2007 dividend of $543 million). ITAA 1997 116-20(1) The question is whether it would be concluded that a person who entered into or carried out the scheme did so for the purpose of obtaining a tax benefit for the relevant taxpayer in respect of the capital benefit. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. This represents a total return of approximately $579 million to Wesfarmers shareholders. ITAA 1936 45C Shares commence trading on an ex return of capital basis. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. 64. Shareholders who did not provide the share registry with their bank account details, may complete a paper Direct Credit Payment Form, which is available from Wesfarmers share registry, Computershare Investor Services Pty Limited, or provide their details online to Computershare at www.computershare.com.au/easyupdate/wes. The Class Therefore, if the cost base or reduced cost base of the share previously owned by you has been fully applied in working out a capital gain or capital loss on the share, the right to receive the return of capital will have a nil cost base. Accordingly, the principal asset test in section 855-30 will not be satisfied. How much did I receive and how was the payment made? In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income.

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